The Institute of Managed Account Providers (IMAP) chair Toby Potter says the regulator's proposed guidance on managed discretionary accounts (MDAs) recognises their importance as a mainstream financial product.
Potter — who has been working closely with the Australian Securities and Investments Commission (ASIC) during its review of the sector — said IMAP welcomed the removal of the no-action letter relating to discretionary management on platforms and the removal of reporting duplication where portfolios are managed through platforms.
"That no-action letter was a piece of poor regulation. (ASIC has now said) if you're going to exercise discretion over a client's affairs, you'd better comply with the law," he said.
IMAP stated that the main drivers behind ASIC's review included the increasing number of financial services organisations using MDAs as part of their response to the Future of Financial Advice reforms and technology change.
"(The paper) is a great example of a regulator being ahead of the curve in anticipating evolving market and regulatory conditions and ensuring that regulation provides a timely and supportive framework for well managed market innovation," Potter said.
Although he acknowledged that the requirements for net tangible assets would impose a "significant burden" on MDA operators, Potter said the alignment of MDA and FOFA requirements was positive "as there have been too many financial services regulations released which had the effect of contradicting those already in effect", he said.
During the consultation period in April, IMAP will be running briefing sessions in Sydney and Melbourne to explain the impact of the proposed changes.
Source: Money management online, March 11 2013